Is the flash memory boat starting to sink?

Revenue for NAND flash memory, the stuff inside MP3 players and digital cameras, came to $2.7 billion in the second quarter, up 21 percent from the same period last year but down 15.7 percent from the year before, according to iSuppli.

Average selling prices dropped 33 percent, steeper than the 20 percent decline predicted for the quarter by the firm. For 2006 as a whole, the price of NAND, as measured per megabyte, will likely now drop 60 percent, more than the 53 percent predicted and more than the .

"NAND ASP declines were due to a flood of supply on the market, as manufacturers ratcheted up production faster than demand grew," said Nam Hyung Kim, director and principal analyst for iSuppli in a prepared statement.

Memory is like that. As I've said before, making memory isn't really a job, it's a bad gambling habit. Building new factories costs billions and designing new chips can run into the millions. However, since a lot of companies launch into their grand plans simultaneously, which leads to a glut in the market. Back in the '90s, some DRAM makers had to sell chips for less than they cost because of the supply glut.

It also explains why most manufacturers of flash didn't make much money until a few years ago.

Revenue for NOR flash, used in cell phones, meanwhile rose 6 percent in the quarter. NOR is supposed to be dying.